Rents for best-in-class warehouses and distribution centers increased just 2.2 percent over the last year around the world. But in the Puget Sound area, rents jumped nearly 17 percent, reports CBRE.
With so many companies offering on-demand products, industrial buildings need to be located near growing population centers, such as Seattle. Seattle added 21,000 people over the last year as the metro region’s population grew by 86,000, according to the Puget Sound Regional Council.
Seattle’s warehouse rent growth of 16.9 percent was nearly seven percentage points greater than Pennsylvania’s Lehigh Valley, which had the second highest rent growth in the world. The Leeds/Sheffield market in the United Kingdom was third with annual rent growth of 9.5 percent. Oakland, California saw rents rise 9.4 percent, reports PSBJ.
Four years ago, South Seattle warehouses were going for rents of 60 to 65 cents per square foot. Now the same space is going for $1 a foot or more.
Another major driver of the growth in demand for warehouse space is Seattle’s international trade, says CBRE. The Northwest Seaport Alliance of Seattle and Tacoma reported this spring that container volumes grew 13 percent from 2016. That was the largest increase in more than 10 years.